Big Four bank has tepid quarter for home loan growth, but business and institutional revenues save the day
A tug of war between brokers and branch managers is heating up at Big Four bank Westpac.
Third-quarter results published on Wednesday show that proprietary channel share (home loans originated directly via Westpac’s own staff and branches) fell by 2.7 percentage points in June on a year-on-year basis.
In total, 46% of Westpac’s $515 billion home loan portfolio was held directly by Westpac at the end of June 2025.
It was not the most bullish quarter for Westpac’s mortgage segment, with the total portfolio creeping up just over 2% from $504.2 billion in June 2024.
In comparison, Commonwealth Bank, which is the only Australian bank with a larger mortgage book than Westpac, saw a 6% yearly increase in its mortgage balance per results published on Wednesday (albeit from a 12-month set of results).
Major banks, including Westpac and CBA, are increasing their focus on proprietary (aka direct) mortgage lending through branches, as they deliver higher net interest margins.
While Westpac hasn’t disclosed the profit gap, CBA said yesterday broker-originated loans are about 20 to 30% less profitable than direct loans.
CBA has succeeded in shifting the balance towards proprietary lending, which now comprise up to 66% of its total mortgage portfolio, compared to below 50% at Westpac.
Not that it should spook Westpac chief executive Anthony Miller or new retail bank boss Carolyn McCann too much.
With top-line group-wide net profit up 14% year on year to $1.9 billion in the last quarter, Westpac’s shares took a 6.3% swing higher today.
"This quarter we delivered a sound financial result, while executing on our strategy and priorities. We grew strongly in business and institutional banking, while focusing on returns in Consumer and improving customer experience,” said Miller.
“The resilience of both households and businesses has been aided by the reduction in interest rates and the moderation of inflation. This is reflected in lower levels of customer stress. It should also underpin a recovery in private sector activity and support lending growth,” Miller added.
